FTSE 100 firms sign up to Prompt Payment Code

Three quarters of FTSE 100 businesses have signed up to the Prompt Payment
Code, following a campaign by The Telegraph and a threat from the Government
that they would “name and shame” those that did not.

The Telegraph uncovered examples where companies were delaying payments for 90 or 120 days despite the services or products already being provided.

In January, Michael Fallon, the enterprise minister, said he was giving larger companiesa month to sign up to the codethat means suppliers can be sure they will be paid on time for the services they offer.

The move came after The Telegraph uncovered examples where companies were delaying payments for 90 or 120 days despite the services or products already being provided.

Mr Fallon said that he would now be moving on to the public sector to ensure local authorities and police services sign up to the code.

“We have tripled the number of FTSE 350 companies [that have joined the code],” Mr Fallon said. “We now have three quarters of the FTSE 100 signed up and more are committing to do it. Business has responded. I am now opening up a second front in this war and calling on local councils to do the same.

“Only 166 out of 432 councils have signed the code. Only two out of 42 police authorities have signed the code. Business is doing its bit, it is now for the public sector who are major purchasers for small businesses to step up and sign up as well.” He said he was giving public sector organisations three months to sign up.

Recent FTSE 100 signatories to the code include Next, Petrofac and Sainsbury’s. Businesses such as Amec, the engineering firm, and the miner, Rio Tinto, are not presently signed up to the code according to the latest prompt payment code list seen by The Sunday Telegraph.

Government sources said that the list will be updated again on Monday and that some of the businesses could be in the process of signing up. Other FTSE 100 businesses have very little business in the UK and so are unlikely to join the code.

“Cash flow is absolutely critical for small companies at any time, but even more particularly in these difficult economic times,” Mr Fallon said.

“It is vital that people who are owed money should be able to get it quickly.”

The business minister said that signing up to the code ­allowed suppliers to see what all companies were doing in a sector which would encourage best practice. He admitted that 90 and 120-day payment terms were often “too long”.

“By signing up to the Prompt Payment Code we will be able to see what the competitors are able to do,” he said.

“They [the longer payers] will come under pressure to match the terms offered by their competitors. I would hope they will be shamed by their competitors.”

John Walker, the national chairman of the Federation of Small Businesses, said that three quarters of their members had experienced late payment problems. Of those, 10pc were waiting for payments of more than £35,000.

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